By Farooq Awan

Pakistan’s national savings were recorded at 14.13% of gross domestic product (GDP) in FY2025-26, reflecting the importance of domestic resource mobilization for investment-led economic growth, according to the Pakistan Economic Survey 2025-26 released by the Ministry of Finance.

The survey highlights savings as a critical component of economic development because higher savings provide resources for investment, reduce dependence on external financing and support long-term growth.

According to the survey, national savings stood at 14.13% of GDP in FY2025-26 compared with 14.89% in the previous fiscal year. Domestic savings were recorded at 7.03% of GDP, down from 7.87% last year.

The Ministry of Finance notes that savings performance remains important for supporting investment and strengthening economic resilience during periods of domestic and external uncertainty.

The survey indicates that Pakistan’s economy grew by 3.70% during FY2025-26, supported by positive contributions from agriculture, industry and services. As economic conditions improved, investment activity also remained broadly stable.

According to the report, foreign savings stood at 0.24% of GDP in FY2025-26 against a negative 0.47% in FY2025. The survey said the modest positive level of foreign savings indicated that the savings-investment gap remained contained, while supporting investment activity and growth momentum during the year.

The survey highlights that the savings-investment trend underlines the importance of strengthening domestic resource mobilization, encouraging higher savings and improving investment efficiency to support sustainable economic expansion.

Higher savings are important for supporting investment activity. According to the survey, the investment-to-GDP ratio remained broadly stable at 14.38% in FY2025-26 compared with 14.42% in FY2025.

Private investment emerged as one of the stronger-performing indicators of the economy, rising by 12.8% during FY2025-26. Gross fixed capital formation at current market prices was provisionally estimated at Rs16,071.2 billion, showing an increase of 10.9% over FY2025.

The report notes that improved macroeconomic and exchange rate stability, along with continued reform measures, helped support investment activity during the fiscal year.

The Ministry of Finance emphasizes that savings and investment are closely interconnected. Higher savings provide financial resources that can be channelled into industrial expansion, infrastructure development, business growth and technological modernization.

The survey notes that stronger domestic resource mobilization can help reduce reliance on foreign borrowing and external financing, improving economic sustainability over the long term.

Pakistan’s banking sector also benefited from improving financial conditions during the fiscal year. Increased deposits and financial activity supported the mobilization of domestic resources and strengthened financial intermediation.

According to the report, continued growth in digital banking and financial inclusion initiatives is expanding access to savings instruments and formal financial services across the country.

The survey highlights that workers’ remittances, which rose by 8.2% to US$30.3 billion during July-March FY2026, also supported household financial resources and the external account.

The external sector’s improved performance further strengthened the macroeconomic environment. ICT export remittances rose by 19.7% to US$3.38 billion during July-March FY2026, while the current account recorded a marginal surplus of US$72 million during the same period.

According to the Ministry of Finance, sustained economic growth remains essential for improving savings performance over the medium term. Higher productivity, rising incomes and expanding employment opportunities generally support greater household and corporate savings.

The survey also points to the importance of capital market development in mobilizing savings and directing them toward productive investment. Market capitalization at the Pakistan Stock Exchange increased to Rs16.534 trillion by March 31, 2026, from Rs15.237 trillion on June 30, 2025, reflecting stronger investor participation and financial market activity.

The report notes that Pakistan’s long-term development objectives require higher levels of savings and investment to support infrastructure development, industrial expansion and human capital formation.

The Ministry of Finance emphasizes that continued improvements in macroeconomic stability, financial inclusion and investment opportunities will remain important for sustaining growth in national savings.

With national savings recorded at 14.13% of GDP and investment activity remaining broadly stable, FY2025-26 underlined the importance of strengthening domestic resource mobilization to support economic growth and development financing.

Credit: INP-WealthPk